Amarillo Receives Encouraging Initial Metallurgical Results From Butia Gold Prospect, Brazil

Amarillo Gold Corp. (TSX-V: AGC) (“Amarillo” or the “Company”) is pleased to release the initial metallurgical testwork results on samples of mineralized sulphide drill core from the Butia deposit which is part of the Lavras do Sul project, in southern Brazil.  The initial resource estimate at the Butia prospect reported 215,000 ounces of gold indicated from 6.4 MT at 1.05 g/t Au, and 308,000 ounces of gold inferred from 12.9 MT at 0.74 g/t Au using a 0.3 g/t cut-off grade in a NI 43-101 compliant resource independently determined by Atticus Consulting in 2010.

Diagnostic leach test results showed that 98.4 % of the gold reported to the solution indicating the proportion of free gold in the sample. The results suggest that the gold mineralization at Butia consists mainly of free gold and will be amenable to conventional CIL cyanide leach with moderate retention time.

The diagnostic leach test was conducted as follows: a composite sample made up from 7 different drill holes representing 230 metres of mineralization was crushed to minus 10# mesh. Four aliquots of this material, weighing 3.9kg in total, were sent to the SGS Mineral Services Laboratory in Santiago, Chile for the test.  The purpose of this test is to determine the metallurgical nature of the Butia prospect, by showing how much gold is free and available to cyanide, how much is locked up in sulphides, silicates, and other minerals. The four samples were milled to 75 microns (P80), combined and then split into approximately one kilo sub-samples which after compositing, assayed, 0.94 g/t Au. The sample was designed to be representative of the deposit in average grade and composition. 

A straight 24 hour bottle roll cyanidation test was conducted on 300 grams of the sub-sample at a pH of 10.5 using a 2g/l cyanide solution.  After 18 hours the cyanide concentration was readjusted back up to 2g/l for the last 6hours of the 24-hour test.

The company can now design more comprehensive metallurgical tests that will assess the percentage of free gold from different grades and rock types within the deposit, and also focus on details of such as reagent consumption rates, retention time and ideal grind size.

The NI 43-101 compliant qualified person for this news release is Frank Baker, a metallurgist with over 30 years experience and a member of AUSIMM and the IOM3.

About Amarillo Gold Corp.

Amarillo Gold Corp. is focused on acquisition, discovery, and definition of gold resources in Brazil.  The Company’s principal projects are the Mara Rosa Project in the state of Goias, and the Lavras do Sul Project in the state of Rio Grande do Sul.  The Posse Deposit at Mara Rosa contains 1,174,900 ounces of measured and indicated gold contained in 20.85 MT at 1.75 g/t Au, and 156,400 ounces of gold inferred from 3.63 MT at 1.38 g/t Au (0.5 g/t cut-off grade) (NI 43-101 compliant resource as independently determined by Australian Exploration Field Services Pty. AEFS).  The Mara Rosa Gold Project has received a positive economic assessment from a Pre-feasibility study and is preparing to proceed to a bankable feasibility study. Should this continue to be positive it would be possible to commence mining by 2014.

The Posse Deposit was successfully mined by Western Mining Company (WMC) during the 1990s (mined areas are excluded from the above-stated resource figures), and is located in an area of excellent infrastructure: approximately 35 km NE of Yamana’s Chapada open pit Cu-Au operation, some 60 km NE of Yamana’s Pilar Au project (in Feasibility), 95 km NW of Votarintim’s Niquelandia Ni laterite mine,  105 km from NE of Serra Grande’s underground Au mine, and 105 km NNW of Anglo American’s Ni laterite project at Barro Alto.  Grid power to the site was established during WMC’s open pit mining operation.  The Serra da Mesa (450 MW) hydro-electric dam lies 35 km to the east.

The Lavras do Sul Project is an advanced exploration stage property (190 sq. km.) comprising more than 19 prospects centered on historic gold workings, with encouraging gold mineralization discovered and defined by more than 16,000 metres of drilling.  The initial resource estimate at the Butia prospect reported 215,000 ounces of gold indicated from 6.4 MT at 1.05 g/t Au, and 308,000 ounces of gold inferred from 12.9 MT at 0.74 g/t Au using a0.3 g/t cut-off grade in a NI 43-101 compliant resource as independently determined by Atticus Consulting 2010.  Lavras do Sul is also located near excellent infrastructure.  The Company also has a portfolio of earlier stage projects and all properties under Amarillo’s management are located in areas of good infrastructure and mining-friendly communities.

ON BEHALF OF THE BOARD OF DIRECTORS

AMARILLO GOLD CORP.
    
Per: “Buddy Doyle”    
    Buddy Doyle, President

Contacts:

Amarillo Gold Corp.
+ 1-604-689-1799 (Canada)
+55-31-3261-5974 (Brazil)
info@amarillogold.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FORWARD LOOKING STATEMENTS:
This news release contains Forward Looking Statements regarding our intentions and plans. The PFS model presented in this news release is not a production forecast by the company. There remains at present insufficient certainty in the PFS to reliably estimate future production and economics, further engineering and geology studies are required to determine this.  The scope of this PFS was to deliver a project with plus or minus 20% accuracy in its estimates.  Various factors may prevent or delay our plans, including but not limited to, contractor availability and performance, weather, access, mineral prices and success and failure of the exploration and development carried out at various stages of the program. The planned DCF is designed to achieve a higher accuracy in our engineering and economic estimates. At the end of the DCF the company should have enough information to attract bank financing on the project, should it be still be suitably economically and risk attractive.  Permission from the Government and community is also required to proceed with future mining production.